AMD hires bankers to ‘explore options,’ keeps APU delays mum for now

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AMD has reportedly hired a bank to help it “explore options.” This can mean different things, depending on what sort of options the company has in mind, but it’s rarely a good sign for the company in question. This development means AMD has brought in outside help to value its various assets and attempt to ascertain how to best leverage those assets to keep the company afloat.

According to Reuters, who initially broke the story, an outright sale is unlikely at this point in time. Instead, the company may look to sell various patents or other intellectual property. That’s a great idea — in theory. It’s unlikely to stand up in practice, for several reasons.

First, there’s the fact that AMD already went through this process a few years back. AMD sold its handheld graphics business (Imageon) and its 32-bit MIPS SoC (Xilleon) to Broadcom and Qualcomm back in 2008. It divested itself of some 200mm fab equipment at the same time, and later spun GlobalFoundries off altogether.

True, AMD might be sitting on a number of interesting patents, but we’ve got a feeling that the most valuable ones are already licensed to the company most likely to be interested in acquiring them — Intel. Ditto for Nvidia. Cross-patent agreements between all three are extensive and have been updated on a fairly regular basis. Any attempt AMD might make to sell those patents to a third party would likely be constrained by the prior agreements it has in place. A potential customer, like Samsung, isn’t going to be interested in paying top dollar for patent rights it can’t exert against its chief competitors.

That leaves AMD’s two big businesses: x86 and discrete graphics. Even if AMD’s x86 patents rights are broader than they used to be, no one is going to be able to acquire that patent without first going through Intel, and taking on Intel in its core market is a losing strategy. If it wasn’t, AMD wouldn’t be in the position it’s in now.

AMD’s discrete business is valuable, but the GPU market is on a long-term trend towards integrated hardware. Discrete GPUs will never die — not so long as gaming and workstation applications benefit from them — but the market isn’t a hot growth opportunity, either. A company that wanted to take Nvidia on in the professional and HPC spheres could conceivably buy Radeon and explicitly target those areas — but that’s a pretty dubious use-case.

AMD can’t afford to sell its APU patents; they represent the future of the company. It can’t afford to scrap Radeon wholesale (it needs assets for APU development) and its ability to sell x86 assets is going to be substantially constrained.

Let’s talk about Kaveri

Then there’s the added problem of Kaveri. We’ve stated this as a side point in a few stories, but given the current situation, it’s worth bringing out in the light. Kaveri, which was originally slated for a 2013 launch, hasn’t even taped out yet. Given the 14-15 month window between tapeout and product launch, that puts the Piledriver follow-up debuting right around the same time Intel will launch Broadwell, its first-generation 14nm part.

That means that Steamroller/Kaveri will launch into the teeth of a CPU two full generations ahead of them. The reason the chip hasn’t taped out yet, according to our sources, is that AMD has spent time trying to improve its power and IPC to ensure it isn’t thoroughly hammered out of the gate.

As for Richland, there’s considerable confusion over what it really is. Estimates range from a “Piledriver 2.0″ with slightly tweaked clock speeds, to a refreshed GPU with Piledriver CPU, to a mislabeled slide. All of these are possible, since AMD already used that codename to refer to budget A4 products, but we’re confident that regardless of what happens to Trinity in 2013, there won’t be a Steamroller refresh for either the APU or CPU families next year.

AMD may or may not be able to further improve Steamroller by spending more time on the microarchitecture, but 2014 isn’t the problem here, 2013 is. Sales for the next 12 months are going to depend heavily on Kabini (still on schedule) and the “Piledriver 2.0″ refresh, codenamed Richland. That’s probably the biggest reason AMD has brought a bank in now, when it still has some capital in play.

AMD’s ability to survive through 2013 and into 2014, when new parts (and its ARM-based server chips) arrive is very much in question. It’s simply not clear how much more the company can cut its payroll or other expenses before it directly jeopardizes its long-term ability to deliver a roadmap that investors trust to be competitive with other companies. There’s some solid reasons to consider Sunnyvale’s Trinity hardware, but that won’t hold true for long if OEMs stop believing AMD can deliver future products.

Update @ 11/15/2012: AMD’s official response to this story and the original Reuters piece is as follows: “AMD’s board and management believe that the strategy the company is currently pursuing to drive long-term growth by leveraging AMD’s highly-differentiated technology assets is the right approach to enhance shareholder value. AMD is not actively pursuing a sale of the company or significant assets at this time.”

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Xplorer4x4

“taking on Intel in its core market is a losing strategy. If it wasn’t, AMD wouldn’t be in the position it’s in now.”
If you can bring a comparable product to the market, and you can price it right, taking on the competition/leader in the market is not necessarily a loosing strategy. That is the problem, AMD still makes a descent cpu, but their chips just can’t go toe to toe with Intel. You said it your self “Steamroller/Kaveri will launch into the teeth of a CPU two full generations ahead of them.”

Jesse Lee

JUST DIE ALREADY AMD!!!

Jesse Lee

Looks like the end of AMD is at hand and THIS TIME ITS REALLY GOING TO HAPPEN!!! AMD could of put out products worth of me buying them low power high IGP performance average CPU performance in a 5 watt TDP but NOW THAT WILL NEVER HAPPEN.

Joel Hruska

Jesse,

A few days ago, over at vr-zone, you wrote: “First TO FAIL you mean Bulldozer IS NOT AN 8-CORE CPU its a 4 CORE CPU with HT”

No, it isn’t.

Some, like our distinguished, argumentative friend Scali would argue that HT is far superior to AMD’s CMT. But Bulldozer doesn’t use HT. If you’re going to scream loudly from the rooftops, you might want to brush up on the topic first.

Jesse Lee

That’s true Joel but CMT maybe better than HT BUT AMD IS STILL GOING six feet under and because OF RR THE END IS NEAR FOR AMD.

http://www.facebook.com/damon.bailey.14 Damon Bailey

This is not good news people! Im a Blue/Green camp fan, but you all MUST understand that competition is what got us the incredible performance increases we have seen the last several years. a monopoly is NEVER a good thing. a 50/50 split between AMD and Intel or AMD and Nvidia is ideal because the even competition is what drives innovation and competitive pricing. If AMD falls, they wont be the only one squashed by the Intel Juggernaut, but they are the last one standing who has any real chance of competing with Intel. sure, maybe a few years from now, someone will pull a secret project out of the dark and surprise Intel, IF it gets lazy, but historically Intel has never really taken a break to rest on its throne and admire the view. sure, AMD still has a few things over intel right now, their APU’s still fight hard against Atom and the iike, and price per performance is still i great deal. but AMD hasnt been able to stand toe to toe with Intel since the Core series landed in the market.

AMD and Nvidia have played leap-frog for years with flagship cards fighting over the crown, and each has its perks like Eyefinity and 3D vision.that set them apart, but they are still competitive overall even with Nvidia holding a slight advantage for the last 2 years or so. I dont want to see AMD cpu’s die off because i want innovation and reasonable prices from the Intel side. Consumers benefit from a corporate war, and Companies benefit from a monopoly.

GatzLoc

Most would say AMD has been winning the past few years (or some would) with NVIDIA seeming ahead because of money given to developers. Fermi; Need I Say?

Joel Hruska

Gatz,

AMD’s GPUs are really bad at making the company any money. I’ve written about this before. Even when sales have been high (during the HD 5000 series reign, for example), profits were low.

I’ve talked about this on more than one occasion. If you recall, the HD 5000 family was very well positioned against NV’s products at the time. They sold for high margins. Even the low end products that form the bulk of any company’s shipments were well positioned.

Yet AMD’s net GPU margin during this time was quite low. Over the past 6 years, their net margin has been ~6%, while the company’s gross margins have been 35-40% historically. CPU revenue as a % of margin has been significantly stronger than GPU revenue.

This is not NV’s fault. It’s not clear *why* AMD’s cost structure has looked the way it has, but the problem has been persistent — including periods of time when we know NV GPUs were yielding much more poorly than their AMD counterparts.

Jesse Lee

AMD IS DEAD FACE IT!!!!

jcaunter

After reading Charlie’s articles I’m about ready to write off AMD as done. Stick a fork in it. It’s what happens when you have an incompetent board who brings in incompetent management.

The future competition will be between ARM and Intel I’m sure. As for x86, well hopefully someone else pops up to give Intel some competition in that area, or it’ll likely become and anachronism. Which would be sad because I still like playing my x86 windows RPGs from the 1990s from time to time. Come on ARM! Make some hardware that will run a virtual windows xp fast with full graphics and I’ll dump intel!

Jesse Lee

Me too. It would be nice to run windows xp x86 in an emulator like QEMU at full speed. That right with some MIPS in the mix it’ll be pretty much ARM vs INTEL AMD IS DONE FOR.

Jesse Lee

AMD IS DONE FOR Face it. Its really going to happen this TIME. They have no chance to make past 2013. No killer products no kaveri no steamroller no ultra low power APU just low power ones.

http://www.mrseb.co.uk/ Sebastian Anthony

THE AMDPOCALYPSE!

Jesse Lee

Yes that’s right the AMDPOCALYPSE! is HERE. AMD making it past 2013 is highly unlikely. It would take a miracle product from AMD in order to stave off its destruction. 5 watt TDP Kaveri Dual core with 7750 GPU performance is probably what it would take for AMD to stay afloat.

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